Place-Shaping: A Shared Ambition for the Future of Local Government

44 Pages·2007·0.31 MB·English

Place-shaping: a shared ambition for the
future of local government
Executive Summary
March 2007 Sir Michael Lyons
Place-shaping: a shared ambition for the
future of local government
Executive Summary
Sir Michael Lyons
March 2007 London: The Stationery Office £13.50
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Preface
From the beginning of this Inquiry in the autumn of 2004, I have
taken the view that questions about local government taxation and
the funding of local services are not simply matters for technical
analysis, but need instead to be considered in a wider context.
They must be part of a broader debate about the type of country
we want to live in: the balance we strike between citizen,
community and government in terms of both power and voice,
and how we manage the inevitable tensions between diversity,
choice and a desire for common standards. In this respect, I follow
firmly in the footsteps of Sir Frank Layfield, who reached similar
conclusions in the 1976 report of the Committee of Inquiry into
Local Government Finance.
Sir Michael Lyons
The extension of my remit in 2005, when ministers asked me to
consider the future role and function of local government in this country, as well as its funding,
reflects this concern to consider the wider context. I have interpreted even that remit generously,
looking to describe how we can develop a new, stronger relationship between central and local
government, founded on a shared interest in the prosperity and well-being of this country and its
citizens. I have sought to explore whether a strong, national framework, together with greater
local flexibility and choice, and improved engagement with the individual, might better enable us
to tackle the complex challenges that we face as a nation. These ‘wicked issues’ include: the need
to build a cohesive society in which everyone feels they have a stake; to improve our own
competitiveness and meet the growing challenge of the emerging economies; to respond to
climate change; and to strike a balance between immediate improvements to public services and
the longer-term investments in infrastructure, skills and research that will underpin our future
prosperity.
In order to strengthen the connections between the individual and government, and contribute
to our wider national objectives, I believe that we must rebalance the relationship between centre
and locality. My second interim report National prosperity, local choice and civic engagement,
published in May 2006, outlined the steps that need to be taken to create the space for local
government to take on its full ‘place-shaping’ role, as well as the measures that councils would
themselves have to adopt to be ready for that challenge. I warmly welcome the Government’s
subsequent White Paper, Strong and Prosperous Communities,published in October 2006, and the
promise it holds for greater devolution.
No one should underestimate the sustained effort which will be required to achieve a real shift in
the balance of influence between centre and locality. The history of the last 30 years is marked by
a series of well-intentioned devolution initiatives, which have often evolved into subtle
instruments of control. But it is an effort worth making.
This report seeks to develop my arguments further and includes my recommendations on how
the future funding of local government could contribute to this rebalancing. However, I am clear
that neither funding, nor powers, nor structures, are by themselves the key to the revitalisation of
local government, and the improved self-confidence of local communities. I stress instead the
March 2007 Lyons Inquiry into Local Government – Final Report i
Preface
importance of changed behaviours in all tiers of government, of local flexibility, and the pressing
need to inspire a sense of powerfulness in local government. This is not a simple argument in
favour of the local, and I stress throughout the importance of improving our ‘single system of
government’ through clarity of responsibility, alignment of purpose, and lean and efficient working
practices.
We now have a real opportunity – with clear evidence of improvement in local authorities across
the country, resurgent and self-assured cities, and an acceptance across the political spectrum of the
need once again to empower our communities – to foster a new public confidence in local
government, and perhaps in representative government at all levels. To meet this opportunity,
central government needs to provide the space, the framework and the incentives that will release
the energies of local councils – but they must in turn embrace the wider place-shaping role, further
strengthen their engagement with those they serve, and establish themselves as unequivocal
champions of value for money.
Just as our present situation is the product of many years, so we must approach this task with the
intention, above all, of setting the right direction for the future, building the constructive
relationships that will enable better decisions in the future. My proposals for the future funding of
local government and the taxation to support it are therefore explicitly developmental. I lay out
recommendations for early changes and others that can follow in due course. These should
properly be seen as a mosaic of related changes, rather than a menu for separate choice. Together
they could improve the fairness and flexibility of current arrangements; introduce greater incentives
for local effort; and provide wider choices to future governments.
Many readers will be preoccupied with my conclusions on the future of council tax (the impatient
should turn to Chapter 7). I conclude that it has a continuing part to play in the future funding
of local government either on its own or alongside other taxes. However, early steps must be taken
to reduce the pressures upon it. I also recommend measures to change the definition of, and
eligibility for, council tax benefit, and believe these must be addressed as soon as possible in order
to improve the perceived fairness of the tax. Concern for fairness has inevitably been raised with
me on many occasions. There is no doubt that the perception of fairness in questions of both
taxation and public expenditure is essential to the sustainability of the system, but there will always
be different views about just what is fair; often dependant on the personal circumstances of the
individual, including their income, wealth and age. I have tried to expose those tensions in my
report. There remain concerns, however, about the lack of buoyancy of council tax and its
continued unpopularity which may mean future governments need and want to consider more
radical change in the longer-term.
I have also explored issues of business taxation in some detail. I offer recommendations which are
again intended to be evolutionary in nature, but do respond to the strong messages I heard about
the need for a closer working relationship between local government and the business community,
and the importance of facilitating substantial new investment in infrastructure improvements and
related measures to foster local economic prosperity.
We elect governments to make difficult choices on our behalf, but I am clear that ministers can
only make changes where they can be confident of public support, or at least tolerance. So my
message, the tensions I expose, and my conclusions, are as much a matter for the people of this
country as for its current Government. I have become increasingly concerned that our expectations
of what government can do for us grow faster than our willingness to meet the costs of those
expectations through taxation, and possibly even beyond what can actually be delivered. Helping
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Preface
citizens to engage in honest debate about our choices, both as a nation and as individual
communities, is the big challenge for this and for future governments.
Local government could play a more active part in the management of these pressures, but it needs
to have both the space, and the willingness, to work with residents and other parts of the local
community to establish clear local priorities, to shape public services to local needs and preferences,
and to strike the right balance between what is done for us and what we do for ourselves.
We should, I believe, be as interested in how we might develop the distinctiveness of different
places and how we leave space for different local choices which improve people’s satisfaction, as we
are about how we seek to achieve potentially expensive, and frequently elusive, ‘consistent’
standards.
I, for one, would hope to see debate about postcode lotteries being replaced, over time, by
discussion of ‘managed difference’ – recognising the right and the ability of local communities to
make their own choices, confident in their own competence, and in the knowledge of their own
preferences.
In closing let me thank, most of all, Sally Burlington and the team that has supported me in this
work. Their talent, enthusiasm and unfailing good spirits (even through several extensions to both
remit and timetable) have been an inspiration to me. I also want to thank the many people and
organisations that have contributed to my research and the wider discussion around it. Special
thanks go to the ‘critical friends’ who have served on my reference group. Finally, let me express
my gratitude to the thousands of people who responded to our extensive efforts to engage the
public in these knotty questions about taxation and local expenditure. The balance and good
humour of the many respondents I met, and their willingness to engage in genuine debate, gives
me confidence that we can find a way forward on these highly contested issues. The views expressed
in this report, together with its conclusions, are of course my responsibility alone.
March 2007 Lyons Inquiry into Local Government – Final Report iii
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Executive summary
LOCAL GOVERNMENT: A CONTINUING DEBATE
1 I was asked to undertake this Inquiry into Local Government by the Chancellor and the
Deputy Prime Minister in July 2004 at a time of considerable public and political interest in and
concern about the funding of local government, and council tax in particular. My initial terms of
reference asked me to make recommendations on the reform of council tax, to consider the case
for shifting the balance of funding, and to conduct analysis of other options for local taxation,
including local income tax, non-domestic (business) rates and other local taxes and charges.
2 During the course of my work on funding, I came to the conclusion that changes to the
finance system could not proceed effectively without the role of local government being more
clearly established. In September 2005 ministers asked me to extend my work to consider the
strategic role of local government, devolution and decentralisation, and how pressures on local
services could better be managed. The full terms of reference are set out at the end of the report.
3 The final stage of my work has been the consideration of the Barker Review of Land Use
Planning, the Eddington Transport Study and the Leitch Review of Skills, three independent
reviews with significant implications for local government.
4 Much has changed since the beginning of my work, including:
• the transfer of schools funding from unhypothecated local government grant to
the ring-fenced Dedicated Schools Grant;
• the Government’s decision to postpone the planned revaluation of domestic
properties for council tax purposes; and
• the publication of various important contributions to the debate including the
Local Government Association’s (LGA) Closer to people and places – a new vision
for local government, and the Government’s proposals for the future of local
government and local public services in Strong and Prosperous Communities – the
Local Government White Paperin October 2006.
5 During the Inquiry I have periodically set out my thinking on both funding and function
issues. My Interim Report and Consultation Paper, published in December 2005, set out some early
thinking on both, including the results of extensive analysis on options for revaluation and reform
of council tax. My May 2006 report, National prosperity, local choice and civic engagement: a new
partnership between central and local government for the 21st century,set out my conclusions on the
role of local government, emphasising the advantages to be secured from an enhanced level of
choice and flexibility at the local level for communities to make their own decisions. I also
discussed my views on the strategic role of local government for the future, a role I call ‘place-
shaping’, discussed further in this report. I want to emphasise that in our discussions about the role
of local government, we must not become fixated on the service delivery role that has become so
important over the last century. There are three, inter-related but identifiable, sets of roles that local
government has played in the past, and continues to play: as service provider; as a vehicle for
investment in public infrastructure; and as an institution of government – a place for debate,
March 2007 Lyons Inquiry into Local Government – Final Report 1
Executive summary
discussion and collective decision-making. An analysis of the modern role of local government
needs to take into account all three of those roles, recognising that the appetite for self-
determination is as much a part of local government’s background as its role as a service provider.
6 Following my May report, the Government set out its proposals for the future direction of
local government in Strong and Prosperous Communities – the Local Government White Paper,
published in October 2006. The White Paper is intended to devolve more power to the local level
and reduce the level of central prescription, while strengthening leadership and expanding the
opportunities for local people to influence local decision-making.
7 I welcome the direction set out by the White Paper and subsequent Bill. However, it is clear
that it is only the beginning of a process and, as this report will demonstrate, much will depend on
how it is implemented, and how both central and local government respond to it. My
recommendations are intended to lay out a ‘developmental’ approach in which steps that should
be taken quickly to improve the current situation can provide greater space for local action, helping
to build trust and effective behaviours in the future and paving the way for possible further reform.
LOCAL GOVERNMENT IN THE 21ST CENTURY–WHAT IS IT FOR?
8 Government is a device that allows us to frame and enforce rules and laws for behaviour,
manage the provision of public services, redistribute resources and manage frameworks for long-
term economic, social and environmental sustainability. Local government has an important
contribution to make as part of a single system of government, allowing different communities to
make choices for themselves, and relating and shaping the actions of government and the public
sector to the needs of the locality.
Pursuing the well- 9 There are strong and compelling arguments for it as a device for allocating public resources
being of citizens and effort efficiently and effectively to secure the well-being of citizens. While individual and
quasi-market approaches are important, there remains a set of issues which are resolutely collective.
This includes decisions about the best use of public money and the management of public good
and other publicly subsidised services in particular places. That does not necessarily mean that
those services need to be publicly owned and directly provided, but it does mean that there must
be the capacity for collective action and choices about the use of public revenues.
Place remains 10 Though some economic and sociological analyses have challenged the importance of place
relevant and the importance of the local in modern society and economics, place remains relevant. As our
understanding of the multi-faceted nature of social and economic problems grows, and as our
aspirations to solve them and to govern uncertainty and diversity increase, the arguments for a local
role in determining the actions of government and the provision of public services are becoming
stronger. In addition, economic analysis continues to identify local factors and institutions as
important influences on economic change and growth.
Necessity of local 11 Accepting these arguments means accepting some degree of variation and difference
choice between different parts of the country in their decisions and their use of resources. Some would
not agree with that view, but it is a point of fundamental importance. The argument that this will
lead to an unfair ‘postcode lottery’ over-simplifies some complex issues. If the people of one area
collectively choose to use the public resources at their disposal in a different way to the people of
another area, it is hard to argue that is unfair.
12 There are therefore strong arguments in favour of a degree of local choice. In practice there
is a desire to see both national standards and local variation. The research I commissioned suggests
that people want an assurance that key services will be delivered to similar (generally minimum)
standards across the country, but also that they want the ability to influence the shape and delivery
2 Lyons Inquiry into Local Government – Final Report March 2007
Executive summary
of services and take decisions locally. There is clearly a balance to be struck between an appropriate
set of national or minimum service standards, and the variety of choices that different communities
can make, and which in my view are a positive part of a healthy and sophisticated system of
governance. My conception of the modern role for local government is therefore of a system which
can deliver this ‘managed difference’.
Importance of 13 However, all of these advantages of local government as a way of pursuing the well-being of
engagement communities depend on it being able to understand and respond to the needs and concerns of its
citizens. This is an area in which it has been criticised, but one where I believe it has a great deal
to offer. Ensuring that local government is fully and transparently accountable to local people for
the decisions it takes in the pursuit of their interests and the use of their resources is critical to an
effective system of local government.
Place-shaping 14 Throughout my work, I have promoted a wider, strategic role for local government, which
I have termed ‘place-shaping’ – the creative use of powers and influence to promote the general
well-being of a community and its citizens. It includes the following components:
• building and shaping local identity;
• representing the community;
• regulating harmful and disruptive behaviours;
• maintaining the cohesiveness of the community and supporting debate within it,
ensuring smaller voices are heard;
• helping to resolve disagreements;
• working to make the local economy more successful while being sensitive to
pressures on the environment;
• understanding local needs and preferences and making sure that the right services
are provided to local people; and
• working with other bodies to response to complex challenges such as natural
disasters and other emergencies.
Services 15 Local authorities are responsible for a wide range of services. However, debate too often
focuses on which services local government is responsible for, as if this is the true measure of the
importance and worth of local representative government. A new conception of the role for local
government needs to go further, to reflect the well-being and place-shaping agenda. Whatever the
legal and constitutional arrangements for the provision of a service or function, if it has impacts on
local people, then the local authority should have a role in representing the community interest and
influencing that service. That requires not just the joining-up of resources and activities, but also
a leadership and influencing role to ensure that the efforts of all agencies are focused on the
outcomes of greatest importance to local people. Local government is well-placed to play this
convening role.
16 Local authorities also have the potential to use their purchasing power and long-term
perspective to shape markets, and to use their ability to engage with citizens and service users in
the design and delivery of services. This would allow them to take advantage of the potential of
co-production to deliver better outcomes and greater efficiency.
March 2007 Lyons Inquiry into Local Government – Final Report 3